Investment ; permissible ? : real estate transaction

Fatawa Question

Dear Prof Kahf, Salaam Alaykum, Thanks for your prompt response on the CBN white paper. It was quite useful. As discussed with your good self in the past, we are constantly receiving application for investments in real estate transactions both for real estate development projects for resale by our prospects who are operators / developers in the real estate industry and private clients / individuals who want to acquire property for personal residential (and other) purposes. The main challenges of the real estate industry in Nigeria is the statutory requirement by the Federal government that the applicable government consent must be sought for all “long term” transactions in real estate and all such transactions must be registered. The conventional players in the industry have devised all sort of means within legal boundaries to bypass / escape the incidence of double transfer / registration fees which usually falls within 10 % to ! 6 % percent of the property value. I have attached for review and recommendations, the model transaction dynamics developed by us to enable us engage in real estate transactions models. The Murabahah model seems most appropriate for these purposes. Our main concern is being able to secure our capital’s position and investment in the event of default such as : • Client’s inability to pay • Loss of interest in the transaction • Death of the client • Bankruptcy and insolvency etc. Based on the above, our questions based on the transaction dynamics attached are : • Can we transfer title to the client, if we do not register our title as the owner of the property I.e. purchase form the vendor and resale to the client ? If so, how can we execute such ? If not, what are the alternatives ? • Can the vendor execute 2 sets of deed of assignment (one in favour of the client and one in the favour of our company) under Islamic finance ? We ask that you please review the transaction dynamics vis a vis our concerns and questions and the final way forward. We look forward to your views and recommendations on the attached document and pray for God’s guidance to you and your family. Many thanks for your usual cooperation. Wa Salaam, Funke

Fatwa

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Publication Date

2009-03-21

Main Subjects

Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Banks
• Islamic jurisprudence
• Financing
• Investments
• Corporations
• Real property
• Vendors and purchasers
• Transactions

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-734376

• APA
• MLA
• AMA